WE WRITE CUSTOM ACADEMIC PAPERS

100% Original, Plagiarism Free, Tailored to your instructions

Order Now!

International Financial Reporting and Analysis
 
Week 5: Hand-In Assignment—Attachment
For the assignment this week, you are provided with two sets of financial statements and then asked to undertake financial analysis on the data. You are also required to calculate earnings per share, both basic and diluted. Finally, you should interpret the measures that you have calculated and provide comments regarding the financial performance of the organisation.
You will find an income statement, statement of financial position, and notes to the financial statements for a fictional company attached below. Each statement shows figures for the past 3 years. After reviewing the financial statements, complete the questions below.
Links to a Word Document

Required:

Complete a ratio analysis on the attached financial statements for each year provided. Compute the following ratios: operating return on equity, financial leverage multiplier, return on capital employed, asset turnover, net profit margin, current ratio, and gearing ratio.
Compute both the basic and diluted earnings per share for each year provided.
Include the above calculations in a business report, providing a detailed analysis of profitability, liquidity, solvency, and asset utilisation of the organisation from the information that you have calculated. What details can you glean from this analysis? What trends do you see? What additional information may be needed to provide a clearer picture?

 
 

Income Statement for the year to 31 January
 
 
 
 

 
 
2010
2009
2008
 

 
 
      £’000
      £’000
     £’000
 

Total revenue
405,607
378,799
348,650
 

Cost of sales
306,158
286,515
264,152
 

 
 

Gross profit
99,449
92,284
84,498
 

 
 

Selling general and administrative expenses
76,651
70,500
65,001
 

 
 

Earnings before interest and taxes
22,798
21,784
19,497
 

 
 

Interest expense
2,199
2,103
1,849
 

 
 
 
 
 
 

Income before tax
20,599
19,681
17,648
 

 
 
 
 
 
 

Income tax expense
7,199
6,950
6,364
 

 
 
 
 
 
 

Net income
13,400
12,731
11,284
 

 
 

Basic weighted ordinary shares
10,500
11,000
12,000
 

 
 
 
 
 
 

Diluted weighted ordinary shares
11,000
11,675
12,300
 

 
 
 

Statement of financial position
as of 31 January
 
 

 
 
 
 
 

 
 
2010
2009
2008

 
 
      £’000
        £’000
      £’000

Assets

Current assets

 
 
 
 
 

 
Inventories
37,769
38,362
36,375

 
Receivables
3,905
3,654
2,840

 
Cash and cash equivalents
7,275
5,569
7,373

Total current assets
48,949
47,585
46,588

 
 
 
 
 

Non-current assets
 
 
 

Land
25,600
25,400
19,000

Buildings
78,000
77,800
75,000

Plant and equipment
24,000
23,500
21,000

Accumulated depreciation
(13,120)
(10,771)
(10,395)

Total non-current assets
114,480
115,929
104,605

 
 
 
 
 

Total assets
163,429
163,514
151,193

 
 
 
 
 

 

Liabilities

Current liabilities

 
Accounts payable
47,721
46,500
43,471

 
Tax payable
7,669
11954
8,283

Total current liabilities
55,390
58,454
51,754

 
 
 
 
 

Long term debt
36,740
35,335
32895

Provisions
6,014
5,117
4,971

Total long-term liabilities
42,754
40,452
37,866

 

Total liabilities
98,144
98,906
89,620

 

Stockholders’ equity

Ordinary shares
47,945
48,030
48,070

Retained earnings
17,340
16,578
13,503

 
 
 
 

Total stockholder equity
65,285
64,608
61,573

 
Summary of Significant Accounting Policies
 
General
 
The company operates three retail stores throughout the United Kingdom and is committed to providing individuals with high-quality products and value to customers. We have fostered a culture that retains devoted and well-trained employees who provide optimal service. Our accounting year ends on 31 January.
 
Cash and Cash Equivalents
 
The company considers investments with a maturity of 3 months or less when purchased to be cash equivalents. The company receives a majority of its payments due from banks for third-party credit card, debit card, and electronic benefit transactions (EBT) processed. These transactions normally complete within 24–48 hours and are thus considered cash equivalents.
 
Receivables
 
Accounts receivable consist primarily of receivables from suppliers for marketing or incentive programs. Additionally, amounts due from banks for customer credit card, debit card, and EBT transactions that take in excess of 7 days to process are classified as accounts receivable.
 
Inventories
 
Inventories are valued at the lower of cost or net realisable value using the retail method. This is computed on the basis of selling price less the appropriate trading margin. All inventories are finished goods.
 
Non-current Assets
 
Non-current assets are stated at cost, and management reviews these assets for signs of impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. If the carrying amount is determined to not be recoverable, potential impairment is based on fair market value.
 
Cost of Sales
 
Cost of sales includes all actual product costs and costs of transportation.
 
 
 
Operating, Selling, General, and Administrative Expenses
 
Operating, selling, general, and administrative expenses include all operating costs of the company except those costs related to the transportation of products from the supplier to the retail stores.
 
Depreciation
 
Depreciation for financial statement purposes are provided on the straight-line method over the estimated useful lives of the various assets.
 
Legal Proceedings
 
The company is not involved with any current litigation.
 
Provisions
 
The company has designated an estimated amount for possible future shop closures and redundancy costs.
 
Dividends
 
The company declared and paid the following dividend amounts in each year to 31 January:
 
2010                       2009                2008
£’000                      £’000                £’000
Dividends                                          12,638                      9,656                9,500
 
Retained Earnings                               762                        3,075              1,784
 
Beginning Retained Earnings      16,578                     13,503            11,719
 
Ending Retained Earnings                       17,340          16,578            13,503
 
Changes in Ordinary Shares
 
The company has been undergoing a systematic buyback of ordinary shares in an effort to increase the value of shares, while also reducing the threat of takeover.

Our Service Charter

  1. Excellent Quality / 100% Plagiarism-Free

    We employ a number of measures to ensure top quality essays. The papers go through a system of quality control prior to delivery. We run plagiarism checks on each paper to ensure that they will be 100% plagiarism-free. So, only clean copies hit customers’ emails. We also never resell the papers completed by our writers. So, once it is checked using a plagiarism checker, the paper will be unique. Speaking of the academic writing standards, we will stick to the assignment brief given by the customer and assign the perfect writer. By saying “the perfect writer” we mean the one having an academic degree in the customer’s study field and positive feedback from other customers.
  2. Free Revisions

    We keep the quality bar of all papers high. But in case you need some extra brilliance to the paper, here’s what to do. First of all, you can choose a top writer. It means that we will assign an expert with a degree in your subject. And secondly, you can rely on our editing services. Our editors will revise your papers, checking whether or not they comply with high standards of academic writing. In addition, editing entails adjusting content if it’s off the topic, adding more sources, refining the language style, and making sure the referencing style is followed.
  3. Confidentiality / 100% No Disclosure

    We make sure that clients’ personal data remains confidential and is not exploited for any purposes beyond those related to our services. We only ask you to provide us with the information that is required to produce the paper according to your writing needs. Please note that the payment info is protected as well. Feel free to refer to the support team for more information about our payment methods. The fact that you used our service is kept secret due to the advanced security standards. So, you can be sure that no one will find out that you got a paper from our writing service.
  4. Money Back Guarantee

    If the writer doesn’t address all the questions on your assignment brief or the delivered paper appears to be off the topic, you can ask for a refund. Or, if it is applicable, you can opt in for free revision within 14-30 days, depending on your paper’s length. The revision or refund request should be sent within 14 days after delivery. The customer gets 100% money-back in case they haven't downloaded the paper. All approved refunds will be returned to the customer’s credit card or Bonus Balance in a form of store credit. Take a note that we will send an extra compensation if the customers goes with a store credit.
  5. 24/7 Customer Support

    We have a support team working 24/7 ready to give your issue concerning the order their immediate attention. If you have any questions about the ordering process, communication with the writer, payment options, feel free to join live chat. Be sure to get a fast response. They can also give you the exact price quote, taking into account the timing, desired academic level of the paper, and the number of pages.

Excellent Quality
Zero Plagiarism
Expert Writers

Instant Quote

Subject:
Type:
Pages/Words:
Single spaced
approx 275 words per page
Urgency (Less urgent, less costly):
Level:
Currency:
Total Cost: NaN

Get 10% Off on your 1st order!